November 18, 2005

Protesting that new federal wiretapping rules will stifle innovation and require the re-engineering of private IP networks at a huge expense, universities, ISPs, libraries and privacy organizations, along with Sun Microsystems Inc., are going to court to overturn the rules.

[...] Sun joined the Center for Democracy and Technology, the Electronic Frontier Foundation, the Electronic Privacy Information Center, Pulver.com, Comptel and the American Library Association in filing a petition with the U.S. Court of Appeals for the District of Columbia Circuit.

[...] “The expansion of the Communications Assistance for Law Enforcement Act to the Internet is troubling, and it is not what Congress intended,” [Sen. Patrick] Leahy said. “We certainly need to hear whether law enforcement agencies are actually experiencing interception problems on the Internet, since the last thing we should do is fix a problem that does not exist.”

Factor in lawsuits that Sony BMG could face, and it’s worth wondering whether the costs of XCP and its aftermath might even exceed whatever piracy losses the company would have suffered without it.

That’s not even accounting for the huge public relations backlash that hit Sony BMG, the second-largest music label, half-owned by Sony Corp (NYSE:SNE - news). and half by Bertelsmann AG.

“I think they’ve set back audio CD protection by years,” said Richard M. Smith, an Internet privacy and security consultant. “Nobody will want to pull a `Sony’ now.”

Phil Leigh, analyst for Inside Digital Media, said the debacle shows just how reluctant the labels are to change their business model to reflect the distribution powers — good and bad — of the Internet. He believes that rather than adopting technological methods to try to stop unauthorized copying of music, record companies need to do more to remove the incentive for piracy.

“The biggest mistake the labels are making is, they’re letting their lawyers make technical decisions. Lawyers don’t have any better understanding of technology than a cow does algebra,” Leigh said. “They insist on chasing this white whale.”

At least that’s what the six broadcast networks — CBS, NBC, ABC, Fox, UPN and the WB — joined together to argue Wednesday, citing new research they contend shows digital video recorders such as TiVo don’t pose as big a threat to the traditional TV spot as once feared.

[...] The view presented by networks was undeniably self-serving since commercial spots are the bread and butter of the TV business. But executives sought to use new research to poke holes in the notion that when technology makes it easier to skip over ads, people will stop watching them altogether.

[...] The networks said their own research showed that more than half of DVR users paid attention to commercials and that they recalled spots they saw. The network studies also indicated something surprising: that 53% of DVR users have gone back to watch commercials they initially fast-forwarded through.